NTT Data Group (OTCPK:NTDT.Y) is making headlines by announcing a multi-year partnership with Amazon Web Services to support cloud modernization, agent-based AI deployment, and digital sovereignty solutions for global enterprises.
Check out our latest analysis for NTT Data Group.
The deal with AWS comes after a period of weakness in the company’s stock, with its one-day stock return down 4% and its seven-day stock return down 4%, with a year-to-date stock return of 6.43% and a one-year total shareholder return of 27.59%, indicating long-term momentum.
If you’re interested in this kind of cloud and AI story, you might want to take a quick look at high-growth technology and AI stocks to find other stocks that shape that theme.
With a one-year total return of 27.59% and three- and five-year returns of over 67%, and recent weak short-term activity, the central question is whether NTT Data is still priced wrong, or whether the market is already pricing in future growth.
28.6x Preferred P/E: Is It Justified?
At its last closing price of $24.00, NTT Data Group’s P/E ratio was 28.6x, making it slightly cheaper than the broader US IT sector, but richer than its closest peers.
The P/E ratio compares the current stock price to earnings per share and is a common way to see how much investors are paying for each dollar of earnings for IT and software services. For companies that provide consulting, cloud, and managed services, it often reflects how durable investors think about their returns and how confident they are that they can continue to grow.
Here, the P/E ratio of 28.6x is below the US IT industry average of 29.7x, representing a slight discount, but still above the peer average of 21.6x, which represents a premium. The estimated fair P/E ratio is 33.3x, which suggests the market could potentially move toward this level if current assumptions regarding earnings growth and quality hold.
Check NTT Data Group’s SWS fairness ratio
Result: price/earnings ratio of 28.6x (approximately right)
However, short-term stock price weakness or slowing annual sales or net income growth could cast doubt on the idea that the current P/E ratio is still valuable.
Learn about the key risks to this NTT Data Group story.
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A great starting point for NTT Data Group’s research is our analysis that highlights 3 key benefits and 2 key warning signs that could influence your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
Evaluation is complex, but we will simplify it here.
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